A year after Raleigh tax increase, work begins on affordable housing

Construction has begun at Washington Terrace, an affordable-housing complex in Southeast Raleigh that is getting a complete makeover as some other complexes near downtown are being sold to developers who want to build pricey apartments.

DHIC, a Raleigh-based housing nonprofit that bought Washington Terrace in 2014, hosted a groundbreaking ceremony Tuesday at the 23-acre site north of Booker Drive, near St. Augustine’s University. In the next two years, the group will build 234 townhomes and apartments for low-income families on the site to replace the old “tired and worn-out units” that were built more than 60 years ago.

“We saw (23) acres in this neighborhood that is rapidly gentrifying as somewhere we could make a transformational impact,” said DHIC president Gregg Warren. “Otherwise, if it had not been for us or another affordable housing developer, the play would be to do much higher-end stuff.”

The redevelopment, which is the largest yet for DHIC, is the first project to get city funding after the Raleigh City Council increased the property tax rate last year by 1 cent to generate roughly $5.7 million annually for affordable housing. Raleigh is providing $8.6 million toward the $45.1 million project.

Like many cities across the country, Raleigh has been dealing with a shortage of housing for low-income families as rent and home prices continue to rise. Affordable housing – and how to pay for it – has become a hot topic in the race for mayor, in which incumbent Nancy McFarlane will face challenger Charles Francis in a Nov. 7 runoff election.

McFarlane has said the city should continue to partner with outside agencies to build affordable housing. Francis has said the city’s efforts are “too little, too late.”

Much of the funding for the revamped Washington Terrace comes from tax-credit financing, the most popular method of affordable housing production used in states like North Carolina, which are barred by state laws from requiring developers to rent a certain amount of their projects at affordable rates.

In this case, DHIC worked with the Wake County Housing Authority to sell $10.5million of tax-credit equity bonds to the National Affordable Housing Trust. In exchange for buying the bonds, the trust can get a tax break on a certain percentage of the investment’s value.

Warren said federal money for public housing developments is no longer a reliable way to build new affordable housing.

“Using tax credits is basically the only viable way to produce affordable, low-income housing these days,” he said.

Like other nonprofits, DHIC can bid for properties that are being sold, but they often don’t have the same resources as private developers. Warren said the group considered trying to buy Wintershaven Apartments, a low-income complex for seniors in Southeast Raleigh that was sold this summer, but the asking price was “way too high.”

The private buyers plan to upfit Wintershaven and convert the one-bedroom units into traditional apartments that won’t be federally subsidized.

Washington Terrace was in foreclosure when DHIC bought it three years ago for $4.75 million.

Shovels stand ready for a groundbreaking ceremony hosted by DHIC Inc., a nonprofit affordable housing developer, Tuesday, Oct. 24, 2017 at Washington Terrace in Raleigh. The event celebrated the launch of a multi-phase redevelopment plan that will include two new affordable housing communities, a park and a child care center.
Travis Long
tlong@newsobserver.com

Washington Terrace was built in 1950 as the first rental community in Raleigh for middle-class black families. Over the decades, the 245-unit complex deteriorated and fell into foreclosure.

When DHIC bought the property, it moved the residents to other apartment buildings.

“The neighborhood, we cared about each other, we shared whatever we had,” said Evangeline Johnson, who has lived in Washington Terrace since she was 4. “When DHIC came in to take over, a lot of the residents, including my mother, were concerned: ‘Where are we going to go? What’s going to happen?’ But we’re still staying here.

“We’re still at home, and there’s no place like home.”

The revamp of Washington Terrace won’t expand Raleigh’s stock of affordable housing, but the complex will have more-spacious floor plans and more amenities, including a park, community building and on-site childcare center.

Two phases of construction will take place. The first phase, expected to be finished in March 2019, is The Village at Washington Terrace, a $32.3 million complex with 162 units. The second phase is Booker Park North, an $11.8 million complex with 72 affordable apartments for seniors 62 and older.

The project is part of Raleigh’s broader plans for the area. A new mixed-income development with 98 single-family homes and 51 townhouses is planned for East College Park.

On Tuesday, state Rep. Yvonne Lewis Holley said residents of the nearby Madonna Acres subdivision can take some credit for Washington Terrace. Holley grew up in the neighborhood and recently moved back.

“We were probably the only community that said we’d welcome low-income housing next to us,” she said. “That’s how we welcome each other. We knew people who had lived here all their lives, and you don’t just put people out like that.”

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